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Goodwill and Other Intangible Assets | 12 Months Ended
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Dec. 30, 2017
Goodwill And Intangible Assets Disclosure [Abstract] |
Goodwill and Other Intangible Assets |
Note 9. | Goodwill and Other Intangible Assets
The table below summarizes our goodwill and other intangible assets at December 30, 2017 and December 31, 2016, respectively, each of which is explained in additional detail below (amounts in thousands):
|  | December 30, 2017 |  |  | December 31, 2016 |
Goodwill |  | $ | 464,777 |  |  | $ | 465,578 |
Amortizable intangible assets, net of amortization |  |  | 535,842 |  |  |  | 592,964 |
Indefinite-lived intangible assets |  |  | 206,600 |  |  |  | 243,000 |
Total goodwill and other intangible assets |  | $ | 1,207,219 |  |  | $ | 1,301,542 |
The changes in the carrying amount of goodwill, by segment, during fiscal 2016 and fiscal 2017, are as follows (amounts in thousands):
|  | DSD Segment |  |  | Warehouse Segment |  |  | Total |
Balance as of January 2, 2016 |  | $ | 424,408 |  |  | $ | 40,518 |  |  | $ | 464,926 |
Change in goodwill related to acquisitions |  |  | 155 |  |  |  | 497 |  |  |  | 652 |
Balance as of December 31, 2016 |  | $ | 424,563 |  |  | $ | 41,015 |  |  | $ | 465,578 |
Change in goodwill related to divestiture |  |  | — |  |  |  | (801 | ) |  |  | (801 | )
Balance as of December 30, 2017 |  | $ | 424,563 |  |  | $ | 40,214 |  |  | $ | 464,777 |
Changes in goodwill related to acquisitions during fiscal 2016 were from DKB in the DSD Segment and Alpine Valley Bread Company (“Alpine”) in the Warehouse Segment. The changes to goodwill from December 31, 2016 to December 30, 2017 were a result of the divestiture discussed in Note 6, Divestiture. Goodwill was not impaired in fiscal years 2017, 2016, or 2015. The table below presents the changes to goodwill by acquisition, for the original goodwill amount recorded at acquisition, from January 2, 2016 to December 31, 2016 (amounts in thousands):
|  | DKB |  |  | Alpine |  |  | Total |
Working capital adjustments |  | $ | 60 |  |  | $ | 497 |  |  | $ | 557 |
Acquisition-related tax adjustments |  |  | (315 | ) |  |  | — |  |  |  | (315 | )
Adjustment to property, plant and equipment |  |  | 410 |  |  |  | — |  |  |  | 410 |
Change in goodwill during fiscal 2016 |  | $ | 155 |  |  | $ | 497 |  |  | $ | 652 |
As of December 30, 2017 and December 31, 2016, the company had the following amounts related to amortizable intangible assets (amounts in thousands):
|  | December 30, 2017 |  |  | December 31, 2016 |
Asset |  | Cost |  |  | Accumulated Amortization |  |  | Net Value |  |  | Cost |  |  | Accumulated Amortization |  |  | Net Value |
Trademarks |  | $ | 371,392 |  |  | $ | 34,716 |  |  | $ | 336,676 |  |  | $ | 402,327 |  |  | $ | 25,129 |  |  | $ | 377,198 |
Customer relationships |  |  | 281,621 |  |  |  | 84,280 |  |  |  | 197,341 |  |  |  | 281,621 |  |  |  | 68,163 |  |  |  | 213,458 |
Non-compete agreements |  |  | 4,874 |  |  |  | 4,874 |  |  |  | — |  |  |  | 4,874 |  |  |  | 4,666 |  |  |  | 208 |
Distributor relationships |  |  | 4,123 |  |  |  | 2,298 |  |  |  | 1,825 |  |  |  | 4,123 |  |  |  | 2,023 |  |  |  | 2,100 |
Total |  | $ | 662,010 |  |  | $ | 126,168 |  |  | $ | 535,842 |  |  | $ | 692,945 |  |  | $ | 99,981 |  |  | $ | 592,964 |
As of December 30, 2017 and December 31, 2016, there was $206.6 million and $243.0 million, respectively, of indefinite-lived intangible trademark assets separately identified from goodwill. These trademarks are classified as indefinite-lived because there is no foreseeable limit to the period over which the asset is expected to contribute to our cash flows. They are well established brands with a long history and well defined markets. In addition, we are continuing to use these brands both in their original markets and throughout our expansion territories. We believe these factors support an indefinite-life assignment with an annual impairment analysis to determine if the trademarks are realizing their expected economic benefits. Fiscal 2017 restructuring and related impairment charges During fiscal 2017, the company recognized intangible asset impairments of $66.2 million that are recorded in the restructuring and related impairment charges line item of our Consolidated Statements of Income. The company is currently undergoing an enterprise-wide business and operational review as discussed in Note 5, Restructuring Activities. The review included a brand rationalization study that impacted certain trademarks’ future use. The study was substantially completed in the third quarter of fiscal 2017. The study concluded that our brands should be classified as either national or regional and brands that did not fit into those categories were to be discontinued. National brands would have more marketing support than the de-emphasized remaining regional brands and in many cases would shift sales from regional brands as certain regional brand bread products are discontinued. As a result of these actions, a triggering event occurred and we examined several trademarks for potential impairment. One of the trademarks was an indefinite-lived trademark asset and was tested by comparing the fair value of the brand to its carrying value. Three finite-lived trademark assets were tested using an undiscounted cash flow test. As a result of this test, the projected cash flows for these brands did not exceed the carrying value. The second step of the test determined the fair value of the asset and the difference between the fair value and the carrying value was recorded as an impairment. The impairment charge also consisted of six brands that either are being discontinued or will have limited future benefits to the company. These brands were fully impaired. All of these impairments were attributed to regional brands. Following the impairments, we evaluated the classification of the impaired indefinite-lived asset and determined that it should be reassigned as finite-lived with an estimated useful life of 30 years. The table below presents the restructuring impairment charges by segment for fiscal 2017 (amounts in thousands):
|  | DSD Segment |  |  | Warehouse Segment |  |  | Total |
Indefinite-lived intangible assets |  | $ | 18,500 |  |  | $ | — |  |  | $ | 18,500 |
Finite-lived intangible assets |  |  | 36,612 |  |  |  | 11,135 |  |  |  | 47,747 |
Restructuring impairment charges |  | $ | 55,112 |  |  | $ | 11,135 |  |  | $ | 66,247 |
Fiscal 2016 impairment charges The company’s core markets were flat in fiscal 2016. As a result, we noticed that several of our brands were performing below expectations in the back half of the year. This was caused primarily from our regional brands that were negatively impacted by our national brands and the flat market in general. The diagnostic phase of the study was completed in our fourth quarter of fiscal 2016 and, at the time, impacted certain trademarks’ future revenue projections. We included the potential impact of this study (for brands known to be impacted at the time of the test) in our expected results while performing our annual impairment test for all of our indefinite-lived intangible trademark assets. This led to a $15.0 million impairment charge of three indefinite-lived trademarks. Following this impairment, the company evaluated the indefinite-lived classification and determined that the three trademarks which were impaired should be reassigned as finite-lived assets with an estimated useful life of forty years each. We do not intend to discontinue using these trademarks; however, our expectation of limiting them to each of their respective core markets impacts their growth potential. The carrying value of these three trademarks, before impairment, was $171.0 million. The fair value of these three trademarks was $156.0 million during our test. The difference between the carrying value and the fair value resulted in a $15.0 million impairment. The remaining indefinite-lived intangible trademark assets all had fair values in excess of their respective carrying values so no impairment was recognized. Amortization expense Amortization expense for fiscal years 2017, 2016, and 2015 was as follows (amounts in thousands):
|  | Amortization expense |
Fiscal 2017 |  | $ | 27,274 |
Fiscal 2016 |  | $ | 24,502 |
Fiscal 2015 |  | $ | 15,403 |
Estimated amortization of intangibles for fiscal 2018 and the next four years thereafter is as follows (amounts in thousands):
Fiscal year |  | Amortization of Intangibles |
2018 |  | $ | 25,780 |
2019 |  | $ | 25,288 |
2020 |  | $ | 24,795 |
2021 |  | $ | 24,234 |
2022 |  | $ | 23,643 |

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- Definition The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -URI http://asc.fasb.org/topic&trid=2144416 + Details
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